THE SHANTUNG IMPASSE.

New Zealand Herald, Volume LIX, Issue 17984, 9 January 1922, Page 6

THE SHANTUNG IMPASSE.

WRANGLE OYER RAILWAY. CHINA CONSULTS AMERICA. JAPAN STATES HER CASE. By Tal«Eraph~Pr«3s Associ&twu-Cwright. (Received 10.6 p.m.) '&■ and N.Z. WASHINGTON, Jan. 7. Tho Chinese delegates interviwed Mr C. P. Hughes and Mr. Balfour to-day. The United States State Department was very careful to explain that tho discussions were absolutely informal and were not concerned with the good offices of the United States. The impression prevails that tlta | parties are not far apart, but evidently the United States is anxious that Japan shall be given no reason to think that the Americans are siding with China and ignoring Japan. After his meeting with Mr. Hughes, Mr. Sze, the head of the Chinese delegation, expressed satisfaction. The impression is growing: here that either the Chinese Government is takins the Shantung matter out of the hands of its delegates and is settling with the Tokio Government direct or the Chineso delegates by their action to-day are preparing the way to acceptance of tho Japanese offer on the grounds that they were advised to do so by Mr. Hughes and Mr. Balfour. It is known that further instructions retried he;e yesterday from Peking. ■ It was officially announced yesterday that the Chinese and Japanese delegates continued their discussion of the Shantung railway question. Tho Japanese proposed a railway loan agreement on the same basis as ordinary loan agreements entered into by China with various foreign capitalists, the term to be 15 years, with the option of redemption in five years. A Japanese traffic manager and chief " accountant should be engaged in the service of the railway, and details as to financial arrangements worked out in Pekin. This plan was not' acceptable to the Chinese, who proposed to make a cash payment in a single deposit with a third Power on a specified data Alternatively China proposed deferred payment either by treasury notes or notes of the Chinese Bankers' Union secured upon railway properties, the payment to extend over 12 years, with the option of completion in three years. China would agree to employ a Japanese district engineer. Neither plan was acceptable to tho Japanese. Mr. Hanihara, in a statement of Japan's position to the press, said that Japan started from the principle that the, railway belonged to Japan, having been transferred to her under treaty provisions. China wanted the line, and Japan replied agreeing to concede half her interest, j China refused, saying that she wanted the entire interest, which had never been China's. Japan then proposed to sell the line, adopting the same methods as China followed in all cases where foreign capital was borrowed for railway building. Mr. Hanihara maintained that the ■' Japanese terms were very reasonable. If Germany had not been besten China would never have got the line, as the German company had agreed to / sell outright to tho German GovernmenTat the end of 30 years. Japan felt that she could not surrender her interest in the entire property immidiately. She felt that if die agieed to China's demand to sell for cish it would be an occasion for an anti-Japanese campaign throughout China cm account of the effort that would be required to raise the necessary money. The Japanese instruction were final and explicit. The British spokesman yesterday indiv cated that the Shantung issue governs the question relating to the return of leased territory in China. Ii no agreement is reached regarding Shantung the Powers are not likely to abandon their leaseholda